VAALCO Energy Inc has announced that it will now move forward with acquiring Sasol Gabon SA’s entire working interest in the Etame Marin block offshore Gabon
In regard to Block DE-8 offshore Gabon, the 60% operated participating interest owner, Perenco, has exercised its preferential rights. As a result, Perenco is acquiring Sasol’s 40% non-operated participating interest, releasing VAALCO from the potential obligation to drill an appraisal well.
In a press statement, VAALCO stated that it will not be subject to any contingency payments due regarding Block DE-8. The terms of the sale and purchase agreement did not attribute a material value to the undeveloped resource at Block DE-8, as such, the purchase price for Sasol’s 27.8% working interest of US$44mn less customary post-effective date adjustments has not changed.
The maximum future contingency payments have been reduced from US$6mn to US$5mn.
Cary Bounds, CEO, commented, “Based on production performance in November, our production capacity, including volumes acquired from Sasol, would be over 9,000 barrels of oil per day and with the recent increase in oil pricing, this should significantly boost our free cash flow profile in 2021.”
“In addition, this transaction is lowering our breakeven cost per barrel by increasing production with minimal increases to G&A expense. While we are disappointed that we will not be participating in Block DE-8, this eliminates the cost to drill the appraisal well, thereby reducing our overall capital commitment in 2021 by between US$7mn and US$9mn and removes the US$1mn potential contingency obligation.”
“We are even more confident in the future for VAALCO, and this acquisition, coupled with the new proprietary 3-D seismic data we are processing over the entire Etame Marin block, will allow us to maximise the value of our Gabon resources,” Bounds further added.
